Spirit of America Energy Investors May Have Grounds for Unsuitability Claims Against David Lerner Associates

Proprietary, Non-Traded Oil, Gas and Energy Investments Plunged  In Value

If your David Lerner Associates broker recommended and sold you any of the firm’s proprietary non-traded oil and gas investments and you sustained significant losses, you may have grounds for an investor fraud claim for damages. 

The privately-held broker-dealer exclusively sold investments and mutual funds to customers in its Spirit of America Energy Fund (NASDAQ: SOAEX), as well as its Energy 11 LP and Energy Resources 12 LP. 

Unfortunately, due to dramatic declines in their values, as well as certain interest payments that are now considered “return of capital,” many of these oil, gas, and energy investors have suffered huge losses. 

Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), is investigating David Lerner Associates over its handling of these proprietary products. We have reason to believe that the brokerage firm and its stockbrokers may have unsuitably sold investments in the Spirit of America Fund and the two non-limited partnerships to many customers. 

Also, the firm and its registered representatives may have overconcentrated some investors’ portfolios in these risky investments. Contact our securities lawyers today and ask for your free, no-obligation case consultation.

Spirit of America Energy Fund, Energy 11, and Energy Resources 12 Are Risky Investments 

Even before COVID-19, the oil, gas and energy industry has been a volatile arena for some time. Yet, David Lerner Associates proceeded to market its illiquid Spirit of America Energy Fund, Energy 11 LP, and Energy Resources 12 LP to many of its customers, including:

  • Retirees
  • Conservative investors
  • Investors who were unable or unwilling to take on too much risk 

Then, the Coronavirus struck, causing more havoc as energy prices dropped and the demand for gas and oil plunged.

Our investment fraud attorneys are also looking into whether David Lerner Associates and its registered representatives misrepresented material facts about Spirit of America Energy, Energy Resources 12, and Energy 11 LP to customers, including not fully apprising them of the risks they were taking on. 

We are also investigating whether the brokerage firm inadequately supervised its registered representatives who marketed these investments, as well as if high commissions and fees were a greater incentive than acting in investors’ best interests. 

For example, according to the Energy 11 and Energy Resources 12 prospectus and partnership agreements, the Managing Dealer was to be paid 6% in selling commissions. Incentive fees could reach up to 4% of gross proceeds of common units sold based on the performance of the Partnership.  These financial fees may also have been why some investors saw their portfolios overconcentrated in these risky oil, gas, and energy investments. 

It is never a good idea to invest too much of a portfolio in one particular security, especially if that investment is particularly high risk. This only increases the chances of greater losses should that security fail.   

Spirit of America Energy Fund 

The Spirit of America Energy Fund has been involved in some of the most high-risk investments available in the energy sector, including exploration and production master limited partnerships (MLPs) and other MLPs, a number of which went bankrupt. The Spirit of America Energy Fund should never have been marketed to most retail investors.

For 30 years, SSEK Law Firm has worked with oil, gas, and energy investors all over the US in helping them to recoup their investment losses. We represent clients with claims involving unsuitability, misrepresentation, overconcentration, churning, and much more. 

Call (800) 259-9010 or contact us online and ask for your free, no-obligation case consultation.

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